[SMM Analysis] Wanhua Chemical Increase Investment in the 200kt Lithium Chemicals Project

Since the beginning of 2026, after undergoing a deep price war in 2025, the lithium battery materials industry has seen a new wave of structural positioning led by chemical giants. In March, Dazhong Mining announced that it planned to sign a tripartite agreement with the Meishan High-tech Zone Administrative Committee and Wanhua Chemical (Sichuan) Battery Materials Technology Co., Ltd. to jointly invest in and build a “200,000 mt/year lithium chemicals project,” with Phase I expected to be planned at 30,000 mt. This marked a critical move by Wanhua Chemical into upstream lithium battery resources, following its earlier positions in cathode materials, electrolyte solvents, PVDF, battery recycling, and other segments.

This move was not an isolated case. Multiple chemical giants, including Xingfa Group, Hubei Yihua, Yuntianhua, Juhua Co., Ltd., DFD, Hengli Petrochemical, and Baofeng Energy, all intensively stepped up their lithium battery positioning in early 2026. Unlike the previous round of extensive capacity expansion, this round of positioning showed three distinct characteristics: extending upstream into resource segments to reinforce the cost moat, expanding downstream across the entire industry chain to build a closed-loop ecosystem, and breaking through into high-end products and next-generation technologies to escape involution.

Wanhua Chemical’s 200,000 mt lithium chemicals project is a typical example of this new-cycle positioning logic. By locking in lithium chemicals capacity through a joint venture with Dazhong Mining, Wanhua Chemical can effectively achieve self-sufficiency in lithium supply. Combined with its previous positioning in LFP, electrolyte solvents, PVDF, polyolefin auxiliary material, and battery recycling, Wanhua Chemical has basically established a closed loop across the entire industry chain of “lithium resources–lithium chemicals–cathodes/electrolytes/auxiliary materials–battery recycling,” making it one of the most representative chemical enterprises with the highest degree of lithium battery integration.

From the perspective of the industry’s competitive landscape, the essence of lithium battery materials is returning to the underlying logic of the chemical industry—cost control, technology R&D, and industry chain coordination capabilities. Chemical giants with capabilities in resource self-sufficiency, premiumization of high-end products, and global capacity positioning are expected to continue expanding their share amid competition in an incremental market. Wanhua Chemical’s upstream extension into lithium chemicals this time means that a key shortcoming in its lithium battery map has now been addressed, and its future core competitiveness is expected to upgrade from the cost advantages of a single material to systemic barriers across the entire industry chain.